Sandra can't believe she lives in an apartment. This suburban colonial was her home for years. She always figured when she sold it that would pay off her mortgage.

But when Sandra had to sell earlier this year, her house in a tanking market was worth $300,000. Problem was: she owed $370,000.

Sandi Davis, former homeowner"I was stuck!"

This home belonged to another worried seller, we'll call him "Bill." When he had to sell, he too owed more than it was worth.

Sandi Davis, former homeowner"I think it's lousy."

We found frantic sellers like Sandra and Bill, trying to avoid foreclosure, turning to a new tactic called a "short sale." They're hoping the bank will just take what they can get and forgive the rest of the mortgage.

We checked real estate listings across the state and found hundreds of short sales, each home offered for less than what the sellers owe the bank. Here's one, and another, and another and another and experts warn its risky business.

Marietta Rodriguez, Director National Homeownership Programs, NeighborWorks America"It can just be devastating, because it takes so much time and energy and it can easily be derailed."

Brokers reveal: both sellers– and buyers– are getting burned when the deals collapse.

Hank Phillippi Ryan"How often would you say they don't go through?"

Johanna Webster, real estate agent"I would say 50-50. You stand a 50-50 chance of it happening."

And it's full of pitfalls: after Sandra's short-sale she was shocked when the bank demanded the $70,000 dollar mortgage balance.

Sandi Davis, former homeowner"I'll tell ya, home ownership used to be the America dream. It's becoming the American nightmare."

In Bill's case–his house had offers on the table–but the deal took so long, the bank foreclosed anyway.

Former homeowner"I'm very angry. I don't think it should have happened this way."

Here's why: there are no laws or regulations about short sales–its all case by case–that's what makes them risky.

Steve Antonakes, Massachusetts Banking Commissioner"Any time you have complicated legal documents its not necessarily easy, and if you're not familiar with this type of paperwork, I would recommend that you bring an expert in to assist you."

It's buyer beware too Agent Webster had three potential buyers for Bill's house. The deals fell through when the bank foreclosed.

Bottom line in this volatile market: short sales can fall short.

Johanna Webster, real estate agent"Most of the time the aggravation and the grief involved with this isn't worth it."

Short sales can work and when they do, can help you out of a financial disaster. We found there are non-profit places ready to give you objective advice on whether it's an option you should explore.(Copyright (c) 2008 Sunbeam Television Corp. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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